Are Loan Modifications & Forbearance Agreements Binding?

I understand RESPA< Tila, etc.  under each I can question my mortgage loan history via a Qualified Written Request, or that's what I thought.  I got a loan in 1996, no problems until it was sold in 1999.  Within 5 months, after making the $3,100.00/mo pymts. payments, my loan servicer filed a NOD for $46,000.00 and sold the loan. 

Facing a sale date the new servicer offered a forbearance agreement and promised a "loan audit".  I accepted and the audit never came.  I did the QWR, etc. and paid $90,000.00 in 9 months, all the time asking about the "audit", each payment postponing the sale 30 days. 

I finally protested and threatened suit.  They re-noticed the sale and demanded $74,000.00. 

I protested and the day before the sale, another Forbearance agreement in 2001 with another "audit" promise.  Same thing all over.  I paid,protested, QWR. etc. 

I stopped paying and they re-noticed the sale.  Again they offered a forbearance agreement in 2002, this time $552,700.00 in arrears.   That was the original loan in 1996. 

I crossed out the wrong amount and with the officers consent for an "audit" sent them $13,000.00 as a deposit for the "audit".  They sold the loan. 

New servicer, same stuff all again.  I had the loan audited by a nationally know audit firm and I was way ahead.  The new servicer wasn't impressed and filed another NOD. 

I filed a lawsuit. 

The suit came down to the 2 last agreements.  Which one is enforceable?  Was it the 2001 that was replaced by the 2002 that was confirmed by the former bank officer or the 2002 that had nothing in arrears and promised a Federal and State mandated debt verification audit? 

Guess what, the Court ruled that a forbearance agreement is not enforceable unless signed by both parties.  Based on that decision it could not be the unsigned 2002 agreement, even with the verification of the bank that drafted it, it had to be the 2001 unsigned agreement. 

My question is, how can a Court enforce an unsigned agreement when they just declared that an agreement had to be signed to be enforceable?  With that question, how can a State Court bar me from my Federal rights under RESPA, etc. via a QWR? 

The other problem is since I am the first case in California of this type, what is going to happen to all of the borrowers that are getting these agreements and do not know they are unenforceable against the lender?   

When the economy recovers the banks will come back and with my case, void all of the agreements and immediately claim all of the deferred or reduced payments.

Gene

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Hello Gene,

I found three cases dealing with servicers entering into workouts (or workouts were alleged) and then a disagreement ensued where the court issued an opinion.

Wright v. Litton Loan Servicing, L.P. (No. 05-02611, E.D. Pa., April 4, 2006) is a case where the borrower entered into a modification with one mortgage lender which resulted from a settlement out of bankruptcy court.  All was well until the loan was transferred to Litton Loan Servicing.  This decision was ruled for the borrower for actual and statutory damages for failure to respond properly to the homeowner’s QWR, plus violations under the FDCPA.  The actual damages included “pain, suffering, and emotional distress”.  Of course, Litton was also ordered to pay the borrower’s attorney fees. 

Hauf v. HomeQ Servicing Corporation, (No. 4:05-CV-109, M.D. Ga. Jan 23, 2007) is the story of a forbearance agreement entered into with The Money Store and then subsequently not honored by HomeQ Servicing.  This is an actionable offense.  The court refused to dismiss the borrower’s “breach of contract” claims against the servicer.

So far, that’s score 2 for the homeowner and 0 for the lender.  Moving on…

JP Morgan Chase Bank v. Murdock (No. L-06-1153, Ohio Ct. App. Feb 23, 2007) is a case where the borrower’s affidavit stating that he entered into a workout agreement with Chase failed to stop the foreclosure.

Three cases above and none of them touch on the exact issue that you described.  My guess would be that the fact that the 2002 agreement was modified on your end without execution on the lender’s side failed to make a valid contract as a matter of law.  And as to a QWR RESPA claim in an affirmative action, that can generally be brought in state or federal court but has a three-year statute of limitations.  I’d say you should be asking your attorney these questions and I am hopeful that consumers are working with attorneys because the pro se litigant creates bad case law for other consumers more often than not.

Thanks for the questions and hope this helps.

Paul

This author is not an attorney and this information should not be considered legal advice.  Please consult an attorney for legal advice.